business | Paul Wallbank - Communications Professional

Daily links: The IoT goes to sea, building the innovation state and Boko Haram

The IoT goes to sea, building the innovation state and Boko Haram’s murderous rampage

The scale of the carnage Boko Haram has inflicted on remote parts of Nigeria is becoming more apparent every day and satellite imagery shows just how much damage the insurgent group is doing to communities in its territories.

Closer to home, Google’s Project ARA gets another outing, we look at how economies can deal with the jobless future, what a terrible aunt Ayn Rand was and how the IoT is going to sea.

The IoT goes to sea

At the CES show two weeks ago Ericsson launched their new maritime cloud service that promises to connect ocean going ships to the same services available on land

Google unveils more about Project Ara

Project Ara is Google’s attempt to reinvent the smartphone, the project came a little closer to completion with the company showing off some of its progress

Creating the innovation state

What do we do in a world where most people’s jobs have gone? Create an innovation state rather than a welfare state could be an answer suggests one economist.

The extent of Boko Haram’s massacres

Words fail to describe the horrors being visited on the people of Nigeria.

Ayn Rand was a terrible Aunty

What happened when one of Ayn Rand’s nieces asked aunty for a $25 loan?

Stack ranking claims another victim in Marissa Mayer’s Yahoo

Stack ranking claims another corporate victim with Merissa Mayer at Yahoo!

One of the clumsiest management tools deployed by modern executives is stack ranking, the practice of putting staff members on a scale where the bottom 20% miss out on bonuses and, in bad times, are the first to be fired.

The process has terrible effects upon the morale of workplaces as it rewards political manoeuvring over effective performance; the worker who focuses on their task and the business tends to be overlooked compared to those who curry favour with the boss.

Another debilitating effect is it destroys teams as it has the perverse effect of discouraging people joining teams with high flying colleagues as it increases one’s chances of receiving a poor rating.

Stack ranking has previously damaged Microsoft and HP and now it appears Marissa Mayer has made the same mistake at Yahoo!.

That Mayer has made the same mistakes at Yahoo! is a disappointment; there were so many high hopes for her in reinvigorating the troubled company. Indeed carrying out the stack ranking process every quarter seems particularly debilitating and management intensive, it’s hard to think of a more effective way of destroying morale and distracting management.

In some situations Stack Ranking can be effective but the way companies like Yahoo!, HP and Microsoft have implemented the method, it’s proven to be the wrong tool for the job of managing high skilled workforces.

When implementing clumsy management tools like stack ranking, it’s worthwhile considering whether it’s the right tool for the job.

Where will the next Silicon Valley come from?

As US research and development spending declines, where will the next Silicon Valley be?

In the development of any global industrial hub, there’s always a series of factors that attracted talent, capital and resources to that location. It’s true whether we’re talking about fifteen century Venice or the English Midlands of the eighteen century.

Silicon Valley is today’s equivalent of those historical powerhouses and what drove California’s Bay Area to be the technological centre of the world was the massive government research spending of World War II, the Cold War and the Space Race.

Which means declining research and development spending by the United States is going to hurt the region’s position in the medium to long term, a warning made by Fareed Zakaria in The Washington Post.

So the question is ‘if Silicon Valley and the US are in decline, which will be hub of the next business and technology revolutions?’

Trapped in our own expertise

We need to think outside the boundaries of our expertise warns investor and entrepreneur Paul Graham

It’s becoming harder to be an expert warns Entrepreneur and investor Paul Graham.

What’s worse, Graham suggests being locked in the way things currently are is the biggest risk for today’s experts as change accelerates across society.

This climate of change makes it tough for investors like Graham to identify the next big things for them to stake money on; when the experts are often wrong it’s hard to figure out whose right in picking what business or technology will be successful in a few years time.

Graham suggests betting on people, particularly the “earnest, energetic, and independent-minded” is a better way of finding the next wave of successful businesses and his views are a useful reminder that ultimately its people who find ways to implement and profit from technology.

The paradox with the changes we’re facing is that the technology is the easy part, it’s the human and social consequences which will surprise us.

Which is why Paul Graham is right about our having to think outside the boundaries of our own expertise.

An age of falling margins

business in 2015 will be a lot more competitive as technology drives prices down

One forecast about 2015 that’s very easy to make is businesses with high costs are in for a tough time.

As competition steps up, global forces puts pressure on prices and technological change allows new competitors into marketplaces, the companies that aren’t flexible and keeping an eye on where they are spending money are going to find 2015 will not be a happy year.

For the tech industry the predictions for next year are easy – there will be more security beaches, governments will want more powers to access our data while proving they can’t be trusted with what they already have, a new hot social media network will appear, well known brands will collapse, the net will get faster, more devices will be connected to Internet of Things and prices will continue to fall.

It’s the falling prices that will be what defines business in 2015 as we enter deflationary times; not the economists’ nightmare of prices falling in the face of collapsed demand – although that’s not out of the question – but in the more positive sense of business inputs being cheaper.

Things are going to get cheaper

A few weeks ago I wrote of futurist and academic Andrew McAfee speaking about the accelerated rate of change in business at the Gartner Gold Coast Conference. One of the immediate effects of that changing world McAfee describes is that a lot of thing are going to get cheaper.

Part of this is driven by newer cheaper sources of energy and labour, other driving factors are increased automation in fields where wages have historically been the biggest cost and manufacturing processes are putting pressure on prices for most goods. The commodities prices collapse may also be a key factor in 2015.

For some industries, such as the IT industry, falling prices aren’t a new concept. Any computer superstore or local PC repairer who holds inventory gets a nasty reminder of the sector’s economics every time they do a stocktake. However many businesses operate on the assumption prices will always rise overtime, a not unfair assumption given the inflation we’ve seen over the last fifty years.

Getting costs down

With falling prices, it means businesses have to be more aggressive in cutting costs; whether it’s telephone or power bills through to professional services or banking fees, the onus is now on managers to squeeze as much value for the dollar as they can.

In the technology field the targets are obvious; are your old computer preventing you from using new software? Do cloud services offer a better deal than your old server based systems? Are your service providers charging too much?

For the wider business looking at how newer technologies affect your workflow could well prove rewarding, it may well there’s whole range of areas your company can become more efficient through adopting new systems.

A good candidate for slashing costs and improving flexibility is transport where too many companies are still paying Cabcharge’s overpriced fees when apps like Ingogo or Uber are cheaper and better. Why have company vehicles when car sharing services like GoGet can offer more value. Do you still need an expensive Yellow Pages listing when a free Google My Business entry will get you in front of more potential customers, particularly on the all important mobile platforms?

Then there’s the whole outsourcing question where it’s becoming easier to hire knowledge workers on an as needed basis through the various online platforms like O-Desk and Freelancer.

Over the break, it’s worthwhile reviewing your operations and seeing where you can use technology to cut costs and become more flexible in face of a rapidly changing marketplace. One prediction is certain; those with bloated costs and inflexible management are in for a tough 2015.

At the mercy of machines

Automation and algorithms are changing business but they are not without risks

Automation is the greatest change we’re going to see in business over the next decade as companies increasingly rely upon computers to make day to day decisions.

Giving control to algorithms however comes with a set of risks which managers and business owners have to prepare for.

Earlier this week the risks in relying on algorithms were shown when car service Uber’s management was slow to react to a situation where its formulas risked a PR disaster.

Uber’s misstep in Sydney shows the weaknesses in the automated business model as its algorithm detected people clamouring for rides out of the city and applied ‘surge pricing’.

Surge pricing is applied when Uber’s system sees high demand – typically around events like New Year’s Eve – although the company has previously been criticised for alleged profiteering during emergencies like Hurricane Sandy in New York.

In the light of previous criticism, it’s surprising that Uber stumbled in Sydney during the hostage crisis. Shortly after criticism of the surge pricing arose on the internet, the company’s Sydney social media manager sent out a standard defence of surge pricing.

We are all concerned with events in CBD. Fares have increased to encourage more drivers to come online & pick up passengers in the area.

— Uber Sydney (@Uber_Sydney) December 15, 2014

That message was consistent with both Uber’s business model and how the algorithm that determines the company’s fares works; however it was a potential disaster for the business’ already battered reputation.

An hour later the company’s management had realised their mistake and announced that rides out of Sydney’s Central Business District would be free.

Uber rides out of the CBD today are free for all riders to help Sydneysiders get home safely. See http://t.co/UIwoom25Bm for more info. — Uber Sydney (@Uber_Sydney) December 15, 2014

User’s mistake is a classic example of the dangers of relying solely on an algorithm to determine business decisions; while things will work fine during the normal course of business, there will always be edge cases that create perverse results.

While machines are efficient; they lack context, judgement and compassion which exposes those who rely solely upon them to unforeseen risks.

As the Internet of Things rolls out, systems will be deployed where responses will be based upon the rules of predetermined formulas.

Businesses with overly strict rules and no provision for management intervention in extreme circumstances will find themselves, like Uber, at the mercy of their machines. Staking everything on those machines could turn out to be the riskiest strategy of all.

Will Sony ever learn its security lessons?

Once again Sony remind us of the importance of IT security.

For the last week the gossip and tech industry websites have been full of revelations gleaned from a massive hack into the network of entertainment company Sony.

Sadly it isn’t surprising that Sony that targeted in that hack, 2011 was described by this site as the ‘year of the hack’ and at the time I wondered when corporate managers would start taking IT security seriously.

As the most recent security breach shows, Sony’s managers certainly weren’t taking their information security seriously as alleged North Korean hackers gleefully disabled systems and downloaded confidential documents.

While Sony’s woes are deeply damaging to the company, not least for the executives caught out gossiping about movie stars, the stakes are far higher for other companies.

In Turkey its alleged a 2008 oil pipeline explosion was caused by Russian hackers while in the US, Palestinian sympathisers are accused of causing massive damage to the IT systems of the Sands Casino group.

Sony may be one of the most digitally incompetent business in history – at least in respect to IT security – but it’s important for every business to making sure their information systems and critical business systems are hardened against attacks.

Painting a target on the competition

Blackberry Enterprise President John Sims has a strong message for his competition

“We’re coming for our competitors” is the warning BlackBerry’s President of Global Enterprise Services, John Sims has for the marketplace in an interview last month.

Sims laid out how BlackBerry’s future lies in managing big data, providing collaboration tools and securing the internet of things. In the short term however, the company needs emerging markets to keep its mobile handset market going.

In an interview last month on Australia’s Gold Coast at the Gartner Symposium, Sims laid out some of BlackBerry’s vision of the company’s future.

Securing the endpoints

The key product is the BlackBerry Enterprise Services which Sims sees as providing the endpoint security for corporate mobile devices and for the internet of things, something that ties into the company’s QNX investment.

For the moment though its handsets are a key part of the company’s immediate future and Sims sees the latent demand from lapsed BlackBerry as essential to success, “there are tens of millions of BlackBerry users who are still sitting on their old handsets.”

“The classic, when it comes along is targeted at that market. We know people are waiting.”

“When we went from the Gold to the Q10, too much changed. You had to go from the BBOS to the BlackBerry 10 and that’s a big change, we changed the keyboard, we took away shortcuts and we changed too much at the same time. With the Classic we’re almost doing a retrofit.”

With the recently released Passport smartphone, Sims says the company is struggling to keep up with demand, “The Passport has done well,” he said. “The problem with it is us, not demand. It’s a supply issue not a demand issue.”

A week after that interview, BlackBerry announced the company would give Canadian buyers of the Passport subsidies of $600. How that ties into the narrative of a popular device isn’t quite clear.

Sims hopes the release of the Classic won’t suffer from supply problems, “we think is going to be more popular so we can be sure when it comes out we’ll be able to get that into the market in sufficient quantities to meet demand.

Discovering emerging markets

The other hope for BlackBerry’s handset business lies in developing markets, “Latin America is very important,” Sims says. “India’s very important and then there are number of important South East Asian markets.”

Part of that emerging market strategy is tied into selling mid priced smartphones into the market, Sims says. “People will say ‘the Z3 is a low end device’, if you go visit Indonesia the Z3 is not a low end device. It’s a middle market device.”

“Xiaomi is doing the low end devices at less than a hundred bucks and we’re doing a device at around $170. So we’re focused on the middle market, people who are professionals or aspiring professionals.”

“With those people in those markets we want to establish the BlackBerry brand as something they are comfortable with,” says Sims in outlining how he sees getting the handsets into business people as being the driver for the company’s other services and products.

Struggling with China

China remains an enigma for BlackBerry however, “in the last couple of years we haven’t focused on China, it’s a huge market and it’s hard for external parties to be successful on their own. Local partnerships are important.”

“John Chen (BlackBerry’s CEO) was recently in China and met with some of the local partners to talk about the possibilities of the future. It’s very preliminary and there’s nothing of any substance there yet but it is on our horizon that we’ve got to have something in the China Market.”

We’re coming for you

Despite the struggles BlackBerry has with its handset business, Sims is defiant about the company’s position in the endpoint security market.

“Ultimately it becomes a question of scale, we’ve got scale because we have a global network. None of the other EMM vendors – Good, Mobile Iron or Airwatch – none of them have the Big Data requirements that we have.”

“A year ago BlackBerry was defensive. We’re not defensive any more. People like Airwatch, Mobile Iron or Good should thank us that we were asleep at the wheel a few years ago and that allowed them to build their companies. That party’s over.”

“We’re coming after them. We have targets painted on each of those companies and as we execute our enterprise strategy we’re coming after them. If I was them I’d be feeling the breathing on the back of the neck.”

For BlackBerry the future lies in security services and the internet of things, though for the short term the company’s cash flow and market position depends upon sales of its handsets.

As the interview with John Sims shows, the company’s success depends upon a few key assumptions coming true; that’s a high risk market.

Paul travelled to the 2014 Australian Gartner Symposium on the Gold Coast as a guest of BlackBerry.

Protecting the world’s soil

How we protect the world’s soil could be the clue to our future prosperity argues National Geographic’s Jim Richardson

One of the speakers at the recent Economist World in 2015 event in Sydney was National Geographic photographer Jim Richardson who described the challenges facing the world’s agriculture industry.

Much of Richardson’s presentation was taken from his series of photographs featuring farmers with their soil and National Geographic’s Feeding Nine Billion People feature.

A striking comment Richardson made in his presentation was how a poor rice farmer in South Asia is actually able to feed from people from their small landholding than a US broadacre farmer. This speaks volumes about how we’ve organised our food supply chains and raises questions on how sustainable our practices are.

In Agriculture, as in many other fields of our life today, we’re looking at major changes to the way we organise production and distribute goods. Richardson’s presentations are well worth considering in how the western world maintains it’s own standards of living while the rest of the planet looks at how it improves their’s.

Despite being essential to our very lives, the quality and availability of arable soil is one of the most neglected aspects of our global development. Jim Richardson’s photos remind us of its importance.

Crowdfunding as product testing

Sony’s FES watch shows the future for companies using crowdfunding to develop new products

A story from the Wall Street Journal describes how Sony have crowfunded their FES watch project, a smartwatch with an electronic paper wrist strap.

Sony’s decision to crowdfund new projects is fascinating, not least because it gives researchers and entreprenuerial employees the opportunity to commercialise projects at little cost or risk to the company but also as a powerful way to judge the market demand for an idea.

The FES watch campaign is good example how companies, big and small, can use crowdsourcing and crowdfunding. As we see more creative applications of the two concepts we may well see some radically new management methods and business models arise.

Where will the digital leaders come from?

Exactly what is digital leadership?

Last Thursday in Sydney a group of industry groups, telcos and local councils launched their 2030 Communications Visions initiative; a project “to shape a digital vision and set of goals for Australia to achieve global digital age leadership”.

The project is a worthy one, particularly given the failure of Australia’s National Broadband Network, which I’m writing about early next week in Technology Spectator however one thing that bugs me is what exactly is ‘digital age leadership’.

If we look at the rollout of technologies like the motor car, electricity or telephone through the Twentieth Century it was a mix of private companies, community groups and governments that championed the development of roads, mains power and phone systems. People either demanded their towns became connected or raised the capital to do it themselves.

So on one level, the champions need to be us. We have to lead our communities and industries by using the technologies and showing what can be done, that also makes our businesses more likely to succeed in the future.

On another level, we need to consider the genuine leaders of the ‘electrical age’ or ‘motor car age’; people like Thomas Edison and Henry Ford built businesses that led the world and still exist today.

For countries, it’s no coincidence that the United States is the richest nation on the planet after having most of the leading business in their industries over the last hundred years.

That latter point is really what the Digital Visions project is about; do Australians want to remain a wealthy nation in the Twenty First Century?

Governments have a role in this, as the UK is showing, and political leaders need to be encouraged to take the digital economy however governments can only do so much and successes like Silicon Valley are more a fortunate by product of spending rather than the consequence of strategic policy.

Ultimately, leadership starts with us — we can’t afford to wait for governments, big business or someone else to take the reigns.